Prime Minister Abiy Ahmed (PhD) has outlined four pressing issues that have spurred the government's drive toward comprehensive macroeconomic reform in Ethiopia. The Prime Minister's remarks provide insight into the factors contributing to the nation's economic challenges; most notably, imbalances in the economy exemplified by high unemployment rates, soaring inflation, and persistent trade deficits.
As the nation grapples with these issues, PM Abiy Ahmed emphasised that the first major concern fueling these reforms is the existing macroeconomic imbalances.
He pointed out that the unemployment rate remains alarmingly high, particularly among youths, which contributes to social unrest and economic stagnation. Coupled with this is inflation, which has seen prices of basic goods and services rise steeply, straining families and affecting overall living standards. Furthermore, trade imbalances remain a persistent challenge, with imports often outpacing exports. This situation has not only drained foreign exchange reserves but has also hindered domestic industries from reaching their full potential.
The Prime Minister elaborated on the second critical issue concerning the unfavourable working conditions for the private sector. "We recognise that a vibrant private sector is crucial for job creation and economic growth," he stated. However, various hurdles, including bureaucratic inefficiencies, limited access to finance, and regulatory burdens, have stunted the growth of businesses. By reforming these areas, the government aims to create a more inviting environment for investors, fostering entrepreneurial ventures and revitalising the economy.
Productivity emerged as the third issue highlighted by PM Abiy Ahmed.
He remarked, "Our productivity in both agriculture and industry has historically been limited. This has led to a myriad of challenges." The agricultural sector, which employs the majority of the Ethiopian population, struggles with outdated farming practices and insufficient technology implementation. Similarly, the industrial sector is hindered by a lack of skilled labour and inadequate infrastructure. Improving productivity is essential, as it not only enhances output but also directly contributes to higher employment rates and increased national income.
The fourth concern mentioned by the Prime Minister was the absence of a competitive economic environment.
He acknowledged that without robust competition, both local and international businesses are less incentivised to innovate and improve services. "We have embarked on tackling these four reasons for economic reform," he asserted, "believing that addressing these issues vigorously will help us resolve the macroeconomic imbalance effectively." This commitment underlines the government’s strategy to strengthen the business environment through pro-competitive policies and measures.
Meanwhile, the Prime Minister’s detailed exposition of Ethiopia's macroeconomic challenges sheds light on the multifaceted nature of the issues at hand. By focusing on unemployment, inflation, trade deficits, the private sector's working environment, productivity, and competitiveness, the government's approach underscores the need for immediate and decisive action. As the nation embarks on this reform drive, it remains crucial for all stakeholders: government, businesses, and civil society to unite in taking necessary steps to ensure a sustainable and prosperous economic future for Ethiopia. The successful implementation of these reforms is expected not only to stabilise the economy but also to lay the foundation for long-term growth and development in the years to come, according to the Prime Minister.